Companies with high operating leverages generally have lower fixed costs than variable costs.

Question

Quizplus · Accepted Answer

Companies with high operating leverages have higher fixed costs than variable costs. This means that as sales increase, a larger portion of the revenue goes towards covering fixed costs, resulting in higher profits. However, if sales decrease, the company will still have to cover the same amount of fixed costs, which can lead to lower profits or even losses.

Companies with High Operating Leverages Generally Have Lower Fixed Costs